Ask Ken: Save now to pay for holiday gifts later

It seems early to start talking about the holiday season but I have actually seen some Christmas decorations and displays already.

I realize that means the retailers want us to start thinking about spending for the holidays. Last year the average American family spent an average of $800 on gifts and holiday-related expenses. For most households that is more than a week’s wages. The fact is most people don’t plan for their holiday expenses and usually end up spending more than they thought they would. That usually leads to the holiday blues when the credit card statements come in January.

So I challenge every one to consider finding a way to start saving now so you can pay cash for your Christmas entertainment and gifts this year.

I know that sounds a lot like budgeting, but here are some simple suggestions to help you have money for a “cash Christmas” and eliminate the January “holiday blues.”

• Open a separate holiday savings account. This will allow you to keep track of how you are doing and keep you on track for your holiday goal. It also can help keep you from spending the money you have set aside on other things.

• Set a holiday budget. Take a little time now and figure out how much you are going to need for the holidays this year. You can use last year as your guide. But if you don’t have any idea how much you spent last year, it is time to take control and figure out what you are going to spend this year.

• Trim your everyday spending so you can trim your tree. Look for any weekly or monthly spending leaks. You can cut back on eating out once a week and save the money, pass up one of those sale items, clip a couple of coupons, etc. If you have a budget, consider cutting back in multiple categories like food, clothing, gas and entertainment, and you might be to save even more without feeling deprived. If you could just cut your weekly spending by $10 to $25 and put it into your holiday savings, think how much you could help the savings grow.

• Check your payroll stub. If you received a tax refund last year. you may be having too much withheld. Last year the average income tax refund was more than $2,000. If you check your pay stub and you aren’t claiming enough dependents, you can adjust the deductions. Then take the difference in your paycheck and put it into your holiday account.

• Get ready to shop the sales. Once you have done your Christmas list or know how much you are going to spend for someone, keep your eyes open for a sale and stretch your savings.

I encourage you to consider my suggestions. Debt is a gift no one wants. Think about giving yourself a debt-free holiday season this year. You will be surprised how good that can feel and I can promise you will avoid the “January blues.”

Need answers to your financial questions? Write Ken King, executive director of Family Service Association, at 1930 N. Eighth St., Sheboygan WI 53081 or e-mail him at ken.king@excel.net. Family Service Association is a United Way agency that helps people improve their financial stability and quality of life by providing education, counseling, advocacy and financial management programs.